Correlation Between Canacol Energy and Riley Exploration
Can any of the company-specific risk be diversified away by investing in both Canacol Energy and Riley Exploration at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Canacol Energy and Riley Exploration into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canacol Energy and Riley Exploration Permian, you can compare the effects of market volatilities on Canacol Energy and Riley Exploration and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Canacol Energy with a short position of Riley Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canacol Energy and Riley Exploration.
Diversification Opportunities for Canacol Energy and Riley Exploration
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Canacol and Riley is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Canacol Energy and Riley Exploration Permian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Riley Exploration Permian and Canacol Energy is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Canacol Energy are associated (or correlated) with Riley Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Riley Exploration Permian has no effect on the direction of Canacol Energy i.e., Canacol Energy and Riley Exploration go up and down completely randomly.
Pair Corralation between Canacol Energy and Riley Exploration
Assuming the 90 days horizon Canacol Energy is expected to under-perform the Riley Exploration. In addition to that, Canacol Energy is 1.14 times more volatile than Riley Exploration Permian. It trades about -0.05 of its total potential returns per unit of risk. Riley Exploration Permian is currently generating about 0.08 per unit of volatility. If you would invest 2,074 in Riley Exploration Permian on November 3, 2024 and sell it today you would earn a total of 1,241 from holding Riley Exploration Permian or generate 59.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Canacol Energy vs. Riley Exploration Permian
Performance |
| Timeline |
| Canacol Energy |
| Riley Exploration Permian |
Canacol Energy and Riley Exploration Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canacol Energy and Riley Exploration
The main advantage of trading using opposite Canacol Energy and Riley Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canacol Energy position performs unexpectedly, Riley Exploration can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Riley Exploration will offset losses from the drop in Riley Exploration's long position.| Canacol Energy vs. PetroShale | Canacol Energy vs. Inpex Corp ADR | Canacol Energy vs. Battalion Oil Corp | Canacol Energy vs. Condor Petroleum |
| Riley Exploration vs. Vital Energy | Riley Exploration vs. Permian Resources | Riley Exploration vs. Magnolia Oil Gas | Riley Exploration vs. Ring Energy |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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